IN SOUTH Africa, the picture is often of poverty —
and particularly the low wages of workers while
bosses and shareholders earn millions. Even the
evening news clips of teachers on strike last year
showed teachers stating that they are the poorest of
the poor. And more recently, newspaper headlines
screamed that people died for R4,500 a month or
that the striking miners wanted only R12,500 a
month.
Meanwhile, last week Statistics SA published a
document called Labour Market Dynamics, which
shows that the median worker earns only R3,000 a
month. Moreover, only 59% of workers have a
pension fund and about 40% have medical aid and,
surprisingly, only 77% have access to the
Unemployment Insurance Fund. Fewer still would
have all three, let alone a bonus or other
allowances.
So according to our official statistics, the rock drill
operators that embarked on the illegal strike at
Marikana, as they net only about R4,500 a month
(after deductions and not taking into account
benefits, monthly allowances and bonuses), are
actually in the richer half of earners when
measured by official statistics — and, as we all
know, their total package is probably only half their
true gross earnings.
Using gross earnings, rock drill operators in South
Africa would be in the top 25% of formal sector
earnings, according to these statistics. The top 25%
of employees, according to Labour Market
Dynamics, start with earnings of R7,500 a month
and the top 10% start at R15,000, indicating that
rock drill operators may be in the top 20% of
employee earners on this scale.
Moreover, only four out of 10 adults work in South
Africa. Unlike the world average, where about two-
thirds of adults work, the country has a very low
employment rate. According to the Stats SA bulletin,
only 7,3-million adults work full time in the formal
sector. These are the adults who earn the most in
South Africa and therefore make up less than 23%
of the working age adult population of 32,9-million.
On the current information from Stats SA, rock drill
operators are therefore earning in the top 25% of
formal employees. As formal, full-time employees
make up less than 23% of adults, we may be talking
about the top 6% of adult income — frightening!
These official figures are somewhat understating
salaries, as people confuse gross and net pay and
often even discretionary spending. I suspect the
R3,000-a-month median to be a red herring and
probably, like our rock drill operators, many others
also forget pension fund contributions, medical aid,
taxes etc.
Using data from the South African Revenue Service,
the Treasury, BankservAfrica and various other
payment sources, it becomes clear that a median
salary for full-time employees in the nonfarm
formal sector is about R10,000 a month, although
the Labour Dynamics Survey states it as R3,000 a
month. So rock drill operators get a salary typical of
the formal sector.
But that still puts the rock drill operators’ salaries
into the richest 12,5% of adults, as only about 23%
of all adults are full-time employees and only about
2% of adults are employers — many of whom earn
less than the rock drill operators.
There is no other way to put it: in South Africa,
when someone in the formal sector goes on strike,
we are probably talking of the "richest" quarter of
adults. Simply put, in South Africa, only the "rich"
can go on strike — the poor are not employed and
many in the middle class are in the informal sector.
There is no doubt rock drill operators do dangerous
work and they are worth a lot to the companies who
employ them. The problem is that, as with many
other formal-sector employees, they are not the
poor in the South African context, nor in the
emerging country context. In fact, the way things
are at present, about 80% of formal sector workers
are part of the richest 20% of the population in
South Africa. Most of the top 20% of income goes to
the formally employed.
So while Lonmin’s rock drill operators might earn a
little less than rock drill operators on other mines,
this means very little in the bigger picture, as they
earn a typical formal salary.
While the shacklands surrounding Marikana look
very bad, the fact is that, according to Stats SA’s
General Household Survey (2011), half of all rentals
there are less than R1,000 a month and shacks tend
to be let out for less than R500 a month. Somehow
the miners’ R1,850 housing allowance goes beyond
paying rent — again, according to official data.
At a recent debt counsellors’ conference, I was told
that many people just do not know how to handle
money and often get into trouble. Despite the
thousands of people in debt counselling, more than
500,000 people still had debt judgments against
them last year. In many cases, these debt
judgments are claimed at the company level, as are
maintenance orders, etc. Along with microloan
payments, pension, medical and union fees, very
often people have more than 70% of their salaries
deducted before they get the money in the bank.
A few years ago, I did some work that showed that
a R7,500-R8,000 salary was very much at the
halfway mark of formal salaries in South Africa.
Today that number is probably about R10,000 a
month. What I am relatively sure about is that less
than 60% of formal employees get much more than
R10,000, which translates into less than 15% of all
adults in the country.
This does not lessen the pain of what happened at
Marikana, but it is time to say to people that not
everyone is as poor as they are portrayed to be.
Most employees in the formal sector should have
pension and medical aids too. This is normal around
the world.
In eight out of the 30 Organisation for Economic Co-
operation and Development countries, teachers’
starting salaries are lower than that of the average
rock drill operators’ gross salaries in purchasing
power parity terms (without bonuses). Greek
teachers now earn less than €800 a month after
many salary cuts. Never mind emerging markets
such as Lesotho, where manufacturing wages are
about $127 a month. In India, hi-tech
manufacturing workers earn about R6,000 a month
— and these jobs are among the highest paying.
What we need above all is leadership — leadership
that informs people that they are not as poor as
they have been led to believe. Based on the hard
facts, the people who sadly died may have thought
twice about embarking on an illegal strike if they
knew that their salaries are actually very much in
the middle in the formal sector and that, taking into
account South Africa’s low employment rate, they
are actually part of the "rich".
Leadership also means addressing the facts — not
just adding to the confusion by repeating the wrong
information, talking inaccurately about "poverty"
and perpetuating people’s belief that they are just
victims.
The unemployed now number more than the full
time-formally employed — and twice that of union
members. All the unemployed are worse off than
the miners, and by perpetuating the "poverty"
misinformation just tells the real poor that the
"rich" miners are poor. That will lead to more
unrest as more people discover how unhappy they
are.
The nightmare will repeat itself because
expectations are not realistic in the broader context
— both from a South African view and an emerging
market view.
Having people think that earning about R10,000 a
month is "poverty" may make for even less job
creation.